Description
This is a presentation describing Category-wise Private Final Consumption Expenditure, Retail industry growth, Organised retail growth, changing consumer lifestyle & Preferences and critical success factors.
• 4TH Largest economy in the World in Purchase Power Parity • Average GDP growth rate between 7% to 8.2% (earlier 6 %) • 2nd Fastest growing economy in the World.
• To be 3rd Largest economy in terms of GDP in next 5 yrs
• 2nd most attractive developing market, ahead of China ( AT Kearney 2004) • 52% of the GDP comes from Service Sector which includes Retailing, IT, Telecomm., Healthcare etc. • India is 2nd in the list of the Preferred Destinations in the World
- UNCTAD’s World Investment Report 2004
• FDI Inflow grew by 24%
USD 3.44 Bn - 2002 USD 4.26 Bn – 2003 USD 6.60 Bn – 2004
Category-wise Private Final Consumption Expenditure
11% 3%
Rs 57,367 cr
Education, Recreation
43%
Rs 7,18,136 cr
Food, Beverage, Tobacco
Rs.1,78,998 cr Miscellaneous
15%
Rs 2,58,696 cr
Transport, Communication
Total Private Final Consumption Expenditure is Rs 16,90,000 cr 55% is Retail Sales i.e. Rs 9,30,000 cr
8%
Rs 1,42,143 cr
Medical, Health Care
5% 4% 12%
Rs 2,03,391 cr
Rent, Fuel, Power
Rs 79,631 cr
Clothing, Footwear
Rs 49,852 cr
Furniture, Furnishing, Appliance
RETAIL INDUSTRY GROWTH
1400000 1200000 1000000 800000 600000 400000 200000 0 2004 2005 2006 2007 2008 2009 2010
By 2010 Rs 12,00,000 cr
Growth Rate is 5%
ORGANISED RETAIL GROWTH
100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010
By 2010 Rs 1,00,000 cr
9% of Total Retail Industry
Growth Rate is 30%
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Demographic & Psychographic Change
• Per Capita Income/ GDP is slated to double by 2014 • Second fastest growing Economy in the World
• Discretionary spending increased to 16% in urban middle class
• From 1995 to 2004 High Income Household Increased by 60% to reach 44 million • One of the Youngest Populations of the World •Highest paid Managers in the World
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Design & Quality Acquiring Significance
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increase in Number of Working Women
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Kids becoming more aware Of External Environment & more Demanding
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Effort to Look Good & Feel Good
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Influence of International Travel & Media
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Easier Acceptance of Luxury
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Willingness to Experiment
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
More Nuclear Families
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Propensity towards Disposability
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Rise in Urban Self Employment
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Pragmatism in Consumption & Preference for Value
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Credit Friendliness
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MScalable & Profitable Retail Model
well established for most of the Categories
Large Indian Corporate groups kin to enter in Retailing Investment in this sector is estimated at INR 20,000 cr by end of 2010
(Now Reliance Retail, alone is estimated to invest Rs 25,000 cr by 2010)
Foreign investors are equally kin e.g. Wal-Mart, Tesco, Targets, Darling of Stock Exchange
(P/E Ratios are High in Trent & Pantaloon)
Value based concepts will drive organized retailing
(such as Big Bazaar, Spensers,& Vishal Mega Mart)
BY YEAR 2007
50 million sq.ft. of Quality Space under development
6 Major cities to account for 41 million sq.ft. 300 malls, shopping centers & multiplexes to come To open 35 Hypermarkets
325 Large department Stores
1500 Supermarkets 10,000 quality outlets
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MRetail Space no longer a Constraint
India’s DAZZLING new Malls – Emerging Economic Superpower A Decade ago not a single Mall 6 yrs Ago less than half a dozen Malls By end of 2006 there will be 200 new Malls covering 35- 40 million sq.ft.
(50 % will be in 6 Metros – 65 in Mumbai & NCR)
And by 2010 there will be 600 new Malls covering 120 million. sq.ft.
(Anticipated to spread over 60 Cities)
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MRetail Space no longer a Constraint
Manufacturer & Retailers are targeting Tier II Cities
(Expected to grow to 20 -25 %)
Mall Development activity in Tier II Cities are picking up at rapid pace NRI’s are renewing relationship with it’s roots Specialty Malls – Emerged as one stop destinations in chosen Category
(GOLD SOUK, WEDDING MALL, AUTO, TOY, HOME AND FACTORY OUTLET)
Disturbing Trends, Clustering
(20 new Malls in Gurgaon operational in 1 yr )
Malls will be prime drivers of Organized Retailing & not High Streets
( Not like - 5th Avenue in NY, Oxford Street in London, Causeway Bay in HK Lack of maintenance, Encumbrances, Multiple ownerships, Parking Hassle, Lack of civic sense
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M India on the Radar of Global Retailers
Many International retailers have entered
Category
Food & Beverages Apparels Consumer Products Durables Grocery Sporting goods Luxury Entertainment
International Player with presence in India
McDonald’s, Domino’s Pizza, Pizza Hut, Subway, KFC, Debonair Pizza, Baskin Robins, Ruby Tuesday Tommy Hilfiger, Mango, Marks & Spencer, Lacoste, Lee Copper, Pepe, Benetton, Wrangler, Levi’s P&G, Levers, Nestle, Cadbury Sony, Phillips, LG, Samsung, Nokia, Electrolux Metro- cash & carry, Shoprite holding Nike, Adidas, Reebok, Swatch, Esprit, Cartier, LVMH, Village Roadshow, Imax
For most India is sourcing HUB
(Wal-Mart, GAP, Tesco, JC Penny etc.)
Buying Volume of these players already more than Rs 1000-2000 cr/yr
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M Supplier/ Brand willing to partner
Shift in Bargaining power from Manufacturers to Retailers
Now Retailer is no longer “ unnecessary evil “
They have started acknowledging as channel member
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M Rapid evolution of New-age
Young Indian Consumers
Indian population Youngest in the World – median age 24 Spends on lifestyle oriented products & services Spends on non-conventional products categories
( Cell-phone ring tone INR 500 cr, Valentine’s gifts 1500 cr. Etc)
More youth travel abroad, more exposure to International Formats, hence they demand compatible formats Increase number of Foreign Tourist visit India forming an important target for global retailers in India
Some Challenges still need to be Overcome
Regulatory Barriers
Labour Legislation
( Shop & Estb. Act, Minimum Wages, Maternity Benefits Act etc.)
Differential Tax System
( VAT, Sales Tax, Octroi, Entry Tax)
Stringent compliance of APMC
Skilled Human Capital
Fragmented Suppliers Lack of Industry Status
CRITICAL SUCCESS FACTOR
~ To Define a Distinct & Sustainable Retail Proposition – For Value-Conscious Indian Consumer
~ Significant Investment to Achieve excellence in SCM ~ To acknowledge regional & Cultural differences to align Merchandise mix
~ Offer Indian Centric Strategies with the Benchmarked with Global Standards like
`Value proposition, Service, Experience, Efficiency, Hygiene etc.
~ Effective Private Label Strategy
~ Indulge in Backward Integration
doc_201294154.ppt
This is a presentation describing Category-wise Private Final Consumption Expenditure, Retail industry growth, Organised retail growth, changing consumer lifestyle & Preferences and critical success factors.
• 4TH Largest economy in the World in Purchase Power Parity • Average GDP growth rate between 7% to 8.2% (earlier 6 %) • 2nd Fastest growing economy in the World.
• To be 3rd Largest economy in terms of GDP in next 5 yrs
• 2nd most attractive developing market, ahead of China ( AT Kearney 2004) • 52% of the GDP comes from Service Sector which includes Retailing, IT, Telecomm., Healthcare etc. • India is 2nd in the list of the Preferred Destinations in the World
- UNCTAD’s World Investment Report 2004
• FDI Inflow grew by 24%
USD 3.44 Bn - 2002 USD 4.26 Bn – 2003 USD 6.60 Bn – 2004
Category-wise Private Final Consumption Expenditure
11% 3%
Rs 57,367 cr
Education, Recreation
43%
Rs 7,18,136 cr
Food, Beverage, Tobacco
Rs.1,78,998 cr Miscellaneous
15%
Rs 2,58,696 cr
Transport, Communication
Total Private Final Consumption Expenditure is Rs 16,90,000 cr 55% is Retail Sales i.e. Rs 9,30,000 cr
8%
Rs 1,42,143 cr
Medical, Health Care
5% 4% 12%
Rs 2,03,391 cr
Rent, Fuel, Power
Rs 79,631 cr
Clothing, Footwear
Rs 49,852 cr
Furniture, Furnishing, Appliance
RETAIL INDUSTRY GROWTH
1400000 1200000 1000000 800000 600000 400000 200000 0 2004 2005 2006 2007 2008 2009 2010
By 2010 Rs 12,00,000 cr
Growth Rate is 5%
ORGANISED RETAIL GROWTH
100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2004 2005 2006 2007 2008 2009 2010
By 2010 Rs 1,00,000 cr
9% of Total Retail Industry
Growth Rate is 30%
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Demographic & Psychographic Change
• Per Capita Income/ GDP is slated to double by 2014 • Second fastest growing Economy in the World
• Discretionary spending increased to 16% in urban middle class
• From 1995 to 2004 High Income Household Increased by 60% to reach 44 million • One of the Youngest Populations of the World •Highest paid Managers in the World
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Design & Quality Acquiring Significance
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increase in Number of Working Women
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Kids becoming more aware Of External Environment & more Demanding
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Effort to Look Good & Feel Good
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Influence of International Travel & Media
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Easier Acceptance of Luxury
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Willingness to Experiment
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
More Nuclear Families
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Propensity towards Disposability
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Rise in Urban Self Employment
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Pragmatism in Consumption & Preference for Value
CHANGING CONSUMER LIFESTYLE & PREFERENCES
Change – Share of Population by Age Group
Increased Credit Friendliness
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MScalable & Profitable Retail Model
well established for most of the Categories
Large Indian Corporate groups kin to enter in Retailing Investment in this sector is estimated at INR 20,000 cr by end of 2010
(Now Reliance Retail, alone is estimated to invest Rs 25,000 cr by 2010)
Foreign investors are equally kin e.g. Wal-Mart, Tesco, Targets, Darling of Stock Exchange
(P/E Ratios are High in Trent & Pantaloon)
Value based concepts will drive organized retailing
(such as Big Bazaar, Spensers,& Vishal Mega Mart)
BY YEAR 2007
50 million sq.ft. of Quality Space under development
6 Major cities to account for 41 million sq.ft. 300 malls, shopping centers & multiplexes to come To open 35 Hypermarkets
325 Large department Stores
1500 Supermarkets 10,000 quality outlets
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MRetail Space no longer a Constraint
India’s DAZZLING new Malls – Emerging Economic Superpower A Decade ago not a single Mall 6 yrs Ago less than half a dozen Malls By end of 2006 there will be 200 new Malls covering 35- 40 million sq.ft.
(50 % will be in 6 Metros – 65 in Mumbai & NCR)
And by 2010 there will be 600 new Malls covering 120 million. sq.ft.
(Anticipated to spread over 60 Cities)
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
MRetail Space no longer a Constraint
Manufacturer & Retailers are targeting Tier II Cities
(Expected to grow to 20 -25 %)
Mall Development activity in Tier II Cities are picking up at rapid pace NRI’s are renewing relationship with it’s roots Specialty Malls – Emerged as one stop destinations in chosen Category
(GOLD SOUK, WEDDING MALL, AUTO, TOY, HOME AND FACTORY OUTLET)
Disturbing Trends, Clustering
(20 new Malls in Gurgaon operational in 1 yr )
Malls will be prime drivers of Organized Retailing & not High Streets
( Not like - 5th Avenue in NY, Oxford Street in London, Causeway Bay in HK Lack of maintenance, Encumbrances, Multiple ownerships, Parking Hassle, Lack of civic sense
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M India on the Radar of Global Retailers
Many International retailers have entered
Category
Food & Beverages Apparels Consumer Products Durables Grocery Sporting goods Luxury Entertainment
International Player with presence in India
McDonald’s, Domino’s Pizza, Pizza Hut, Subway, KFC, Debonair Pizza, Baskin Robins, Ruby Tuesday Tommy Hilfiger, Mango, Marks & Spencer, Lacoste, Lee Copper, Pepe, Benetton, Wrangler, Levi’s P&G, Levers, Nestle, Cadbury Sony, Phillips, LG, Samsung, Nokia, Electrolux Metro- cash & carry, Shoprite holding Nike, Adidas, Reebok, Swatch, Esprit, Cartier, LVMH, Village Roadshow, Imax
For most India is sourcing HUB
(Wal-Mart, GAP, Tesco, JC Penny etc.)
Buying Volume of these players already more than Rs 1000-2000 cr/yr
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M Supplier/ Brand willing to partner
Shift in Bargaining power from Manufacturers to Retailers
Now Retailer is no longer “ unnecessary evil “
They have started acknowledging as channel member
WHY INDIAN ORGANISED RETAIL IS AT THE BRINK OF REVOLUTION
M Rapid evolution of New-age
Young Indian Consumers
Indian population Youngest in the World – median age 24 Spends on lifestyle oriented products & services Spends on non-conventional products categories
( Cell-phone ring tone INR 500 cr, Valentine’s gifts 1500 cr. Etc)
More youth travel abroad, more exposure to International Formats, hence they demand compatible formats Increase number of Foreign Tourist visit India forming an important target for global retailers in India
Some Challenges still need to be Overcome
Regulatory Barriers
Labour Legislation
( Shop & Estb. Act, Minimum Wages, Maternity Benefits Act etc.)
Differential Tax System
( VAT, Sales Tax, Octroi, Entry Tax)
Stringent compliance of APMC
Skilled Human Capital
Fragmented Suppliers Lack of Industry Status
CRITICAL SUCCESS FACTOR
~ To Define a Distinct & Sustainable Retail Proposition – For Value-Conscious Indian Consumer
~ Significant Investment to Achieve excellence in SCM ~ To acknowledge regional & Cultural differences to align Merchandise mix
~ Offer Indian Centric Strategies with the Benchmarked with Global Standards like
`Value proposition, Service, Experience, Efficiency, Hygiene etc.
~ Effective Private Label Strategy
~ Indulge in Backward Integration
doc_201294154.ppt